The Sunday Mail
Recent media reports on the misconduct of chief executive officers (CEOs) leave a lot to be desired.
The growing number of CEOs that are being brought before the courts on allegations of abuse of office and corruption, especially in the public sector (State enterprises and parastatals, for example), seriously damages the country’s economic growth and development aspirations under Vision 2030.
As more and more cases of CEO misconduct are reported in the media, the country’s reputation risk and its ranking on African and global corruption perception indexes increases; thus, scarring away potential investors and foreign direct investment.
Zimbabwe’s ranking on corruption perception indexes such as Afrobarometer, Ibrahim Index of African Governance, Transparency International Corruption Perceptions Index, has been deteriorating in the past five years, suggesting that comprehensive interventions should be made by Government and society as a whole to fight corruption.
Lead by example
CEOs should lead by example as they are supposed to be the fountains of ethics in organisations they lead.
However, the conduct of some CEOs in Zimbabwe goes against the grain of ethics.
Some organisations in Zimbabwe are slowly “rotting from the head” and it won’t be long before that rot spreads to all internal organs of such organisations, which often leads to their collapse.
A key tenet of good corporate governance is ethics.
Ethics is pivoted on ethical values of integrity and responsibility.
CEOs, as leaders, should demonstrate high standards of ethical behaviour on and off the job.
Ethics is the central nervous system of good corporate governance.
CEOs are entrusted with huge responsibilities as stewards of organisations they lead.
CEOs, as company directors, should lead by example by upholding high standards of ethical behaviour.
CEOs, as leaders, should also take personal responsibility for their actions in and off work.
Corporate governance best practices place higher standards of corporate behaviour on those that are in positions of leadership.
The behaviour of CEOs is guided by good business ethics as characterised by the following attributes: discipline, transparency, independence, accountability, responsibility, fairness and respect.
Ethics make a difference between a CEO that will succeed and one that will fail.
Non-adherence to good ethical standards leads to corruption, which, in turn, handicaps performance and reputation of a company and its entire board.
Society expects CEOs, as leaders, to set the right tone at the top.
There is a moral expectation that integrity should permeate in all aspects of the CEO’s conduct both on and off work.
Leaders are supposed to create trust within and outside the organisations they lead.
The conduct of CEOs should thus be aligned to both the organisation’s ethical standards and societal norms on integrity.
CEOs, through their conduct, should create trust and confidence with their stakeholders such as shareholders, investors, boards of directors, employees and the society in which they operate.
CEOs negative behavioural conduct within and outside an organisation — such as corruption, fraud, theft, abuse of assets, violent conduct or domestic violence — produces negative effects (ethical risks) that are detrimental to the performance of an organisation.
Bad corporate behaviour of a CEO creates negative publicity for an organisation, which, in turn, produces harmful consequences for that organisation.
The reputation of an organisation suffers, the morale in an organisation goes down, performance is negatively impacted, confidence of investors/shareholders is lost and shareholders lose value of their investment.
In developed countries, the bad behaviour of a CEO can impact the organisation the moment it appears in the media.
Share prices drop on the stock market, investors are driven away, contracts are cancelled, thus, affecting the sustainability of an organisation.
That is why CEOs are either fired or are “forced” to resign immediately if they are involved in any scandal on or off work.
It is high time that CEOs in Zimbabwe realise that being a CEO does not give them the right or opportunity to behave as they wish.
Of course, being a CEO presents a good opportunity, but that opportunity comes with responsibilities and obligations.
CEOs should know that they occupy those positions at the pleasure of owners of the organisations they lead, the shareholders.
Boards of Directors
Boards of directors have a huge responsibility in corporate governance as they superintendent over CEOs and top management in organisations.
Directors have a fiduciary responsibility to ensure that CEOs maintain high standards of ethics and comply with best practices enshrined in corporate governance codes.
Directors should not “sleep on the switch” in exercising their oversight role over management.
Directors should always monitor conduct of their CEOs and take appropriate disciplinary action where there is misconduct (regardless of whether such misconduct is on or off the job) that violates set ethical standards and impacts negatively on the organisation or its reputation.
Boards of directors should ensure that CEOs are held accountable and that they lead by example through adherence to high standards of ethical behaviour.
Directors should also ensure that the organisations they lead have robust codes of ethics, which set out an organisation’s ethical standards and consequences for their breach.
Vision 2030 requires corporate leaders such as CEOs to tighten their belts and work tirelessly to turn around organisations they lead so that they can contribute meaningfully in building the Zimbabwe we want.
Allen Choruma can be contacted on e-mail: [email protected]